In honor of National Literacy month, I thought I’d talk about the benefits of financial literacy. The economic crisis affecting our country confirms that financial education is needed now more than ever (Connelly, 2009). Being financially literate will help us in budgeting for the future.

In order to promote financial literacy, we need to teach our children and young people how to save money. In my experience, when a child learns the benefits of saving, that child is more likely to apply those benefits in the near future. Overall, studies suggest that financial literacy training can lead to better decision-making (Braunstein & Welch, 2002).

Teach someone about the benefits of financial literacy today. Some of the basic personal financial planning tips are:

§         Prepare a budget – this will give you a snapshot of your revenue and expenses

§         Do not live beyond your means – if you can’t afford it, don’t buy it

§         Anticipate unforeseen expenses – for example healthcare costs

§         Save for a rainy day – you could be unemployed for an extended period

§         Plan for retirement – one day we will grow old and may not be able to earn a living

§         Consider the needs of your dependents – your children, spouse or parents may need your help

§         Pay your bills on time

§         Read about financial planning – Suggested readings include: Ernst and Young’s Personal Financial Guide by Ernst and Young & The 9 Steps to Financial Freedom by Suze Orman,

§         Listen to finance experts – I listen to Suze Orman (http://www.suzeorman.com/)

Have a good week.

References

Connelly, A. (2009). Financial education: needed more than ever. American Bankers Association. ABA Banking Journal, 101(3), 10

Braunstein, S., & Welch, C. Financial Literacy: An Overview of Practice, Research, and Policy. Retrieved September 20, 2009 from http://www.federalreserve.gov/pubs/Bulletin/2002/02bulletin.htm